• Choose a category
• All
• Classic-Fiction

By Root 973 0

wrong, and did their best to learn the appropriate lessons. In contrast with Betamax, Sony made sure that MiniDiscs had ample capacity to record whole albums. And mindful of the importance of content distribution to the outcome of the VCR wars, they acquired their own content repository in the form of Sony Music. At the time they were introduced in the early 1990s, MiniDiscs held clear technical advantages over the then-dominant CD format. In particular, the MiniDiscs could record as well as play, and because they were smaller and more resistant to jolts they were better suited to portable devices. Recordable CDs, by contrast, required entirely new machines, which at the time were extremely expensive.

By all reasonable measures the MiniDisc should have been an outrageous success. And yet it bombed. What happened? In a nutshell, the Internet happened. The cost of memory plummeted, allowing people to store entire libraries of music on their personal computers. High-speed Internet connections allowed for peer-to-peer file sharing. Flash drive memory allowed for easy downloading to portable devices. And new websites for finding and downloading music abounded. The explosive growth of the Internet was not driven by the music business in particular, nor was Sony the only company that failed to anticipate the profound effect that the Internet would have on production, distribution, and consumption of music. Nobody did. Sony, in other words, really was doing the best that anyone could have done to learn from the past and to anticipate the future—but they got rolled anyway, by forces beyond anyone’s ability to predict or control.

Surprisingly, the company that “got it right” in the music industry was Apple, with their combination of the iPod player and their iTunes store. In retrospect, Apple’s strategy looks visionary, and analysts and consumers alike fall over themselves to pay homage to Apple’s dedication to design and quality. Yet the iPod was exactly the kind of strategic play that the lessons of Betamax, not to mention Apple’s own experience in the PC market, should have taught them would fail. The iPod was large and expensive. It was based on closed architecture that Apple refused to license, ran on proprietary software, and was actively resisted by the major content providers. Nevertheless, it was a smashing success. So in what sense was Apple’s strategy better than Sony’s? Yes, Apple had made a great product, but so had Sony. Yes, they looked ahead and did their best to see which way the technological winds were blowing, but so did Sony. And yes, once they made their choices, they stuck to them and executed brilliantly; but that’s exactly what Sony did as well. The only important difference, in Raynor’s view, was that Sony’s choices happened to be wrong while Apple’s happened to be right.17

This is the strategy paradox. The main cause of strategic failure, Raynor argues, is not bad strategy, but great strategy that just happens to be wrong. Bad strategy is characterized by lack of vision, muddled leadership, and inept execution—not the stuff of success for sure, but more likely to lead to persistent mediocrity than colossal failure. Great strategy, by contrast, is marked by clarity of vision, bold leadership, and laser-focused execution. When applied to just the right set of commitments, great strategy can lead to resounding success—as it did for Apple with the iPod—but it can also lead to resounding failure. Whether great strategy succeeds or fails therefore depends entirely on whether the initial vision happens to be right or not. And that is not just difficult to know in advance, but impossible.

STRATEGIC FLEXIBILITY

The solution to the strategy paradox, Raynor argues, is to acknowledge openly that there are limits to what can be predicted, and to develop methods for planning that respect those limits. In particular, he recommends that planners look for ways to integrate what he calls strategic uncertainty—uncertainty about the future of the business you’re in—into the planning process itself. Raynor’s solution,